In the Paris Climate Agreement (COP21), countries pledged to restrict global warming to 1.5-2.0 degrees Celsius by reducing greenhouse gas (GHG) emissions. We examine whether firms respond to the commitments made by countries in the period following the agreement. Using cross-country data with 68,471 firm-year observations and a policy experiment approach, we find that manufacturing firms domiciled in countries with ex-ante higher GHG emissions per capita reduce their capital expenditure intensity after COP21. We also find that the market valuations of such firms are substantially depressed compared to those firms located in countries with low GHG emissions per capita. The findings suggest that climate policy uncertainty and transition risks have likely contributed to the heterogeneous firm response across countries. The insights from our study contribute to a relatively novel literature that assesses the impact of the global climate agreement on capital expenditure intensity and market valuation.